Speculators bet on growth of commodities

Hedge funds are betting that commodity prices are set to rise, according to data from the US Commodity Futures Trading Commission.

The funds expanded their net-long positions across 18 US futures and options by 25 per cent to 671,915 contracts in the week ended 3 January.

In particular, wagers that cotton will rise in price increased by the most since 2009 while crude-oil also reached a three week high. There was also an increase in the number of bets that metals will increase in value.

With US employment falling, and positive manufacturing gains in China, Australia, Germany, India and UK, speculators are feeling more bullish about the global economy. Even though the eurozone crisis continues, it does not seem as dramatic as it was prior to Christmas.

Spruce Private Investors chief executive John Bailey told Bloomberg: “You’ve been seeing a risk-on trade across the board, not just in commodities. Between a calming in Europe, better-than-expected numbers in the US, including employment and housing, has led to a risk-on attitude among managers.”